Returns Stock Transfer Order – Overview and Implementation in SAP

Introduction

STO – Stock Transport Order is vastly used in today’s global business scenario. An example would be where stock is purchased from Vendor and received into one ore more plants. From each of these plants the stock can then be directed to many other plants based on demands.

In the chart below Plant Y places an order on Vendor A. Vendor A supplies the product to Plant Y. Now Plant Y receives an order from Plant X. This is called the Stock Transport Order where the goods are moved from Plant Y to Plant X. Once Plant X receives the goods, it receives an invoice from Plant Y. This is the intercompany invoice.

Return STO is exactly the opposite of STO. Here the flow of goods and the payment is in the opposite direction. This is primarily used to return goods into the original plant. Some of the occasions where this could be used are

To consolidate EOL products at a single location

To return excess or damaged goods back to vendor through the original PO

The below table gives an overall summary highlighting the difference between a STO and a Return STO w.r.t organization, inventory movement, stock movement and financial postings.

Standard STO created at

Plant x

Return STO created at

Plant X

Org values

Vendor = P00YY

Plant = X

Vendor = P00YY

Plant = X

Physical movement

From Y to X

From X to Y

DN creation & system

Movement @ PGI/R

Created at Plant Y

Inventory decremented at Y

Created at Plant Y

Inventory incremented at Y

STO GR/GI &

System movement

STO GR > Inventory Incremented at X

STO GI > Inventory decremented at X

Financial postings

Inter-co AP at Co.Code X (KR)

Inter-co invoice at Co Code Y (IV)

Vendor debit memo at X (KG)

Internal credit memo in Y (IG)

Process Flow

Given below is a generic flow that a standard return STO would be following.

When there is a requirement to return goods from Plant X to Plant Y, a return STO is created on plant ‘X’ with vendor of plant ‘Y’.

Now a delivery is created at Plant ‘Y’ to get the goods from plant ‘X’.

Once the goods are shipped from Plant ‘X’, the return STO GR is done. This will result in reduction on inventory at plant ‘X’.

Once the goods arrive at Plant ‘Y’, the STO DN GR is done. This will result in inventory increment at Plant ‘Y’.

Now Plant ‘Y’ raises an internal credit memo crediting for the return and Plant ‘Y’ balances this with a debit memo.

The number of human touch points can be reduced by automation through the use of 856SC, 861 EDI signals.

SAP Configuration to Implement return STO

This section gives a step-by-step procedure of configuring return STO using standard SAP.

Note: The presumption to this section is that a STO model already exists and hence configurations for STO are not covered.

Following are the standard entities available in SAP that we would be using during this configuration process

PO Type: NB

DN Type: NCR

Item Category Type: NCRN

Vendor Credit Memo: KG

Step 1: Enabling return for STO.

In order for a plant to be capable of receiving return STO, a DN type has to be assigned to the STO doc typ.

Here we are enabling plant ‘64PP’ to receive return STO and hence assigning standard STO return type ‘NCR’. Without this entry, if you try to create a return STO you will receive an error message indicating no delivery type is assigned for the PO type. Please note that for a return STO identified by the Partner as well as the return flag highlighted below on t-code ME23N

Step 2: Assign item category for return Deliveries

SAP has a standard return STO item category ‘NCRN’.

This is assigned to our return delivery type ‘NCR’ and all the item category groups that are part of the material master. This can be done via the below path

Here we are maintain a copy control between order type documents i.e. the source and the delivery document type ‘NCR’

Step 4: Activate Cost determination for item category

Now in order for the price/ cost details to be picked up for crediting the returning entity, we need to enable cost determination for those item categories that are being used for returns. This can be done via the below path

Here we have activated the cost determination for ‘NCRN’ item category.

Step 5: Deactivate Availability check for return STO item Category

This is one of the important setup required. Basically SAP does not differentiate between return and forward STO per their program design. As a result, when a return STO is created it will do an availability check at vendor plant instead of the return at the time of delivery creation. This is incorrect as rightfully, the return is originating at the return plant and availability check needs to be carried out at return plant. To over come this, SAP has advised to turn off availability check for the return STO item categories. Please refer SAP note 329775 for further information.

The availability check for the item category can be turned off via the following path.

Step 6: Finance Configuration

Inter Company AP posting needs to be set up via t.code OBCB for the following combination.

Partner type ‘LI’,

Partner No = Vendor Customer number,

Company code to which returning plant belongs to

The above configurations will apply for each of the item categories that are relevant for return STO. With EDI, one can automate the return STO GR process and DN PGR process. There may be enhancements required to the 940, 856SC and 861 EDI messages particularly to those segments carrying source and destination information as the source and destination gets swapped here when compared to the forward STO process.